Enterprise iLembe in partnership with the iLembe Chamber of Commerce, Industry & Tourism collaborate to produce the iLembe Business Confidence Index (iBCI), aimed at providing a biannual picture of business confidence in the iLembe District of KZN, as well as an overall business outlook.

The index considers economic and market-related aspects that have a bearing on the business mood, amongst businesses, in the iLembe District. It is likely that a region’s business mood will be influenced both positively and negatively by various developments in markets and the economy as a whole and the iBCI seeks to reflect the net results of these influences.

The iBCI is a hybrid index derived from, firstly, a biannual business survey conducted in the iLembe district and secondly, with a weighted index of financial and economic variables.

During 2015 the iBCI was conducted on a quarterly basis, but from 2016 onwards will be conducted on a biannual basis.

The measurement of business confidence is considered significant since it indicates the current and expected state of a region’s economy. It is widely recognised that business leaders’ subjective, individual
expectations play a key role in economic developments.

Highlights And Key Findings

• The protests and resulting disruptions to businesses in the District during the first half of 2016, combined with a deteriorating national economic sentiment, impacted severely on the overall business confidence in the iLembe District, driving the combined hybrid iBCI (survey and activity indices) for the first half of 2016 down by 2.6 index points compared to the fourth quarter of 2015.
• The 2016 mid-year iBCI was recorded at 46.4 index points, the lowest level of business confidence recorded since the commencement of the iBCI, entrenching itself firmly in negative territory.
• The survey component of the iBCI, which was conducted between the mid and end of July 2016, and which records subjective business sentiment, was recorded at an all-time low of 44.7 index points, five points down from the Quarter four 2015 level.
• Negative outlooks around sales volumes (45.6; <10.5) and order books (42.7; <10) were the biggest contributors to the dejected local business sentiment. Sentiment around levels of employment was the only economic activity recorded positively, at 51.1 index points.
• The business confidence in the Manufacturing & Assembly (39.8), Wholesale, Retail & Vehicle Trade (39.7) and Agriculture, Forestry & Hunting (40.7) sectors contributed to the overall gloomy sentiment.
• The most confident economic sector was Tourism, Catering & Accommodation with businesses in this sector reflecting a business confidence level of 64.7 index points, balancing the overwhelming negativity expressed by the other economic sectors.
• In line with the aforementioned sector sentiment, the confidence expressed by businesses in the Mandeni Local Municipality, home to the Isithebe Industrial Estate, which was significantly impacted by the protests, was firmly in the negative on 40.8.
• The six-month outlook around sales volumes, order book, sales prices and employment were all in positive territory.
• An increase in input prices continued to significantly impact on the overall business expectations for the next six months in the iLembe District.

Business Expectations

It is however encouraging to observe that business expectations for the remainder of 2016 are positive at a level of 51.3 a gain of 1.4 points against the last quarter of 2015. This six-month business expectation is
the highest level since the high of 57.9 index points recorded in the second quarter of 2015.

Considering the current positive economic data and other related activities, especially a strengthening rand and revised growth projections, should contribute significantly to the actual performance of businesses in the iLembe District during the second half of 2016.

Enquiries:
Cheryl Peters, Acting CEO, Enterprise iLembe, cheryl@enterpriseilembe.co.za
Cobus Oelofse, CEO, iLembe Chamber of Commerce, ceo@ilembechamber.co.za
Richard Downing, Economist, Econdow, econdow@axxess.co.za